Government should consider Nobel Laureate Abhijit Banerjee’s Advice on Corporate Tax Cut, Fiscal Tightening

The government should consider Abhijit Banerjee’s advice on corporate tax and fiscal tightening. As India’s GDP growth dipped to 4.5% growth rate for the second financial quarter of 2019-20.

No more tax cut

In an event for their book launch, Abhijit Banerjee expressed their concern on the economic situation of India. He said that the government must not slash corporate tax further as the problem lies on the demand side. The government has already decreased corporate tax from 30% to 22%. He stated that cutting tax rates will not encourage the corporate sector to invest more. Abhijit Banerjee stressed on the need to develop a system in every country that works on the principle of individual dignity.

Efforts for Distressed

Further, Abhijit Banerjee appreciated the government efforts for developing a remarkable system that has provided bank accounts to everyone. This can assist the government to help distressed people. In addition, Esther Duflo stated that providing a handout to the poor will make them lazy. Rather, she insisted on administering adequate financial help to give a kick start to the poor.

Fiscal Tightening and Education

Advising for the upcoming budget, Abhijit Banerjee opposed any more fiscal tightening. The government has already breached fiscal deficit by a huge margin and breaching it further won’t make a difference. On government reducing the education budget by Rs 3000 crore, he stated that it would hardly impact the situation. This is because education is a state subject. However, the issue is with the education system being too rigid. He further advised the government to make the education system more flexible. Besides, it should let institutions set the syllabus and focus on overall development.


Abhijit Banerjee regarded Citizenship Amendment Act as a governance problem. He said that it is frightening to be doubtful about one’s citizenship. Providing some people with the huge power of declaring someone a citizen is a problem.

Other Programs

The duo, Abhijit Banerjee and Esther Duflo, have set up J-Pal (the Abdul Latin Jameel Poverty Action Lab) which has the largest office in India. Mentioning the conflicts among policymakers, they highlighted the issue of the gap between research and action.

To conclude, the government must consider Nobel laureate’s suggestions to improve India’s economy. 

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